§ 83.3. Disclosure statement.
(a) Required written disclosure. A life insurance agent, broker or insurer soliciting the type of business to which this subchapter applies shall provide a prospective purchaser with a written disclosure statement clearly labeled as such. An acceptable disclosure statement is attached as Appendix A. If the Appendix A disclosure statement will be used, a letter to that effect, prior to use, is adequate notification to the Department. However, if a statement different than Appendix A will be used, the statement shall be filed with the Department for review prior to use. If an insurer desires to use an advertisement as its disclosure statement, the portion of the advertisement containing the disclosure statement shall be filed for review prior to use. A disclosure statement shall be a document which shall describe the purpose and importance of the disclosure and describe the significant elements of the policy and riders being offered.
(1) A statement that the disclosure is for the insured’s protection, provides basic information about the cost and coverage of the insurance and should be read carefully.
(2) A statement that the disclosure statement may not be considered as an offer to contract or as altering or modifying any policy or rider that might be issued.
(3) The name, age and sex of the proposed insured, to the extent that each is known or can reasonably become known to the company, broker or agent at the time of presentation.
(4) Source of insurance, including the following:
(i) If applicable, the name of the agent or broker, home address or agency address and the home or agency telephone number of the insurance agent or broker making the solicitation.
(ii) The name and home address (city and state) of the insurer to whom applications will be made and a mailing address of the insurer’s home, executive or administrative office to which correspondence should be addressed.
(5) Information about the basic policy, rider or supplemental benefit built into the policy, such as descriptive title, as ‘‘whole life, 20 year decreasing term, endowment at age 65,’’ and the like.
(6) Amount of coverage and benefits offered.
(i) Separately for each basic policy, rider and supplemental benefit built into the policy.
(A) The face amount of coverage; if not applicable, a description of the coverage.
(B) If the face amount of coverage changes (other than through the exercise of dividend options), an explanation as to what changes will occur and when, as ‘‘coverage reduces $100 per month till age 65 when the coverage expires.’’
(ii) Retirement income. If the policy is one primarily designated to pay a guaranteed income, the monthly income payable for life with a ten-year period certain at the appropriate age.
(iii) Cash surrender value.
(A) In policies which develop such values, the applicable amount of cash surrender value per $1,000 or face amount at the end of 5, 10 and 20 policy years and at age 65.
(B) If a loan option is available, the annual percentage loan interest charge.
(7) Premiums.
(i) Separately for each basic policy and rider:
(A) Annual premium; if not known, premium for mode quoted to prospect.
(B) If the premium quoted in clause (A) changes other than by the exercise of an option contained in the policy such as a right of renewal of a term life insurance policy or the exercise of a dividend option:
(I) If one premium changes, the ultimate premium and the effective time.
(II) If more than one premium changes, two representative premiums and the ultimate premium and the effective time of each such change; or an explanation as to what changes will occur, as ‘‘Amount of premium increases 3% each year’’ and the ultimate premium and the effective time.
(C) If the policy contains supplemental built-in benefits, a statement that the cost for such benefits is included in the premium for the policy.
(ii) Total initial annual premium for the policy and rider. If not known, total initial premium for the policy and rider for the payment mode quoted to prospect.
(8) Dividends payable.
(i) If the company chooses to show illustrations, a statement that illustrated dividends are not a guarantee of what future dividends will be.
(ii) If a payment of a dividend is contingent upon the payment of the next premium due, a statement to this effect.
(iii) Dividend illustrations used shall be for policy years 10 and 20 per $1,000 or face amount. A statement that the dividend illustrations will be based on current interest, mortality, and expense experience of the company as reflected in the dividends currently paid and will pertain to the policy or rider being solicited.
(9) Surrender comparison index for policies.
(i) A disclosure that a surrender comparison index will be provided upon delivery of the policy or earlier if requested. If requested earlier, the index disclosure must be provided as soon as reasonably possible. This requirement is not applicable to the following kinds of insurance:
(A) Annuities.
(B) Group life insurance.
(C) Credit life insurance.
(D) Life insurance of less than $5,000.
(E) Life insurance on substandard risks.
(F) Life insurance issued in connection with qualified funded pension plans and qualified retirement plans.
(G) Life insurance issued as a result of a contractual policy change or conversion provision.
(H) Life insurance where the cost is borne in whole or in part by the employer of the insured.
(I) Policies having a varying face amount (resulting from other than the application of dividends).
(J) Variable life insurance.
(K) Family policies.
(L) Term policies.
(M) Riders.
(ii) A provision for the election of earlier delivery.
(iii) A brief explanation of what the surrender comparison index is.
(10) Upon request, the company, fraternal benefit society, or agent, if applicable, will furnish the prospective insured with additional information about the insurance described.
(b) Appendix A. Italicized material in the Appendix A disclosure statement has been included for explanatory purposes only and shall not appear in copies of Appendix A used by insurers. Insurer’s Appendix A form should only indicate applicable terminology or designation in lieu of italicized material.
Source The provisions of this § 83.3 amended through December 28, 1979, effective March 1, 1980, 9 Pa.B. 4251. Immediately preceding text appears at serial pages (42667) to (42669).
Cross References This section cited in 31 Pa. Code § 81.6 (relating to duties of insurers that use agents or brokers); and 31 Pa. Code § 90c.18 (relating to applications intended for use in mail order solicitations of life insurance).
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